Privacy Alliance Responds to FTC Pressure

On the heels of complaints from The Federal Trade Commission that suggested it was moving too slowly, The Online Privacy Alliance released an Internet consumer privacy protection proposal that was presented this morning to the House Subcommittee on Telecommunications, Trade and Consumer Protection.

Earlier today, subcommittee Chairman Robert Pitofsky warned that unless the industry comes up with satisfactory, self-regulatory programs by the end of the year, the government would be forced to step in on the privacy issue.

Online Privacy Alliance advisor and ex-FTC commissioner Christine Varney presented the organization’s policy to the subcommittee, saying that enforcement should be carried out by objective third parties
who would monitor and evaluate whether Web sites complied with privacy
protection policies, and whether they responded to consumer complaints in cases of violations.

“To increase consumer confidence in cyberspace, companies need to
have an independent and trusted third party validate compliance with
clearly stated policies and confirm that companies are engaged in
credible self-regulation,” Ms. Varney said. “Alliance member
companies are taking this step and moving the entire Internet industry

The Alliance’s enforcement framework spells out the group’s objectives: “Whether administered by a third-party privacy seal program, licensing program or membership association, the effective enforcement of self-regulation requires: verification and monitoring; complaint resolution; and education and outreach.”

Specifically, the proposal endorses third-party enforcement programs that designate an identifiable symbol on Web sites, letting Internet users know
if the Web site operator or online service has agreed to adopt a privacy
policy in line with the guidelines laid down by the group in June. In
addition, the symbols would indicate that compliance procedures are in
effect and that a resource is available for complaints.

The Alliance said its guidelines call for members to oversee collecting, using and disclosing personal identifiable
information, choice, data security, data quality and access. The group also said it adopted a parental notification policy to address the concerns of children’s online privacy.

Several members of the Alliance are already involved in similar seal programs from TRUSTe and BBBOnLine, a unit of The Council of Better Business Bureaus.

Recommendations by the Alliance call for seal programs to remain objective, and in order to build
consumer confidence, incorporate a governing body comprised of outside
opinions from the industry, consumer watch-dog programs and academia. The
programs ideally should be “independent and should
endeavor to make receipt of the seal affordable for and available to all
online businesses,” according to the proposal.

“Alliance members have made a remarkable effort to find common
ground on some very complex issues and provide leadership in setting
standards for protecting privacy,” Ms. Varney said.

It remains to be seen if these new efforts will be enough to appease the FTC which recently accused the Internet industry of dragging its heels on the privacy front.

“I presented the policy, and I really didn’t get into a discussion with
them,” said Varney today at a press conference. “But I see there’s a wire
report today where Ira Magaziner says he thinks we’re headed in the right

In June at the U.S. Department of Commerce’s Privacy Summit in Washington, D.C., Commerce Secretary William M. Daley also cautioned Internet companies saying that unless they took a more active role in developing a privacy proposal, the government could get involved.

Members of the Online Privacy Alliance include 30 worldwide corporations and 12 industry associations, including America Online, Microsoft, Netscape, The American Advertising Federation and the Direct Marketing Association.

“The industry is so broad, with so many different sectors,” said Varney, commenting on the adoption of an industry-wide standard for fair information practices. “What works in one sector may not work in another. We’ve got to be careful about establishing one-size-fits-all criteria.”

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